The boss of one of the UK’s largest property developers has today hit out against the government for its “deeply unfair” levy on housebuilders to solve the cladding crisis.
London-listed Barratt Developments has set aside £480m to fix the cladding on buildings it built above 11 metres, however it is expecting to pay another £400m over the next decade via the Residential Property Developer Tax to fix buildings built by others.
In a letter addressed to Levelling Up minister Michael Gove, CEO David Thomas said the government’s approach will choke investment coming into the UK and “leaves no incentive for companies to base themselves in the UK or be listed on the FTSE.
“The unavoidable conclusion is that government is unfairly targeting established UK companies simply because it is easy to do so.”
Gove’s £3bn levy plan, revealed last month, comes on top of a pledge of nearly 40 of the country’s top housebuilders to remediate their own buildings, built over the last 30 years – which has already racked up a cost of £2bn.
A spokesperson for the Levelling Up, Housing and Communities Committee said: “We make no apologies for making developers pay, rather than innocent leaseholders, and will not accept any delays.
“Building safety is an industry-wide failure and we do expect others to step up.
“The Building Safety Act gives developers and freeholders new legal avenues to hold the companies that made unsafe products to account and we will pursue firms that attempt to evade their responsibilities.”
The FTSE 100 housebuilder, which has a £4.8bn turnover, in on track to complete 18,000 and 18,250 homes this financial year, it said in its latest financial update today.
“Government must look to other responsible parties to make up any funding shortfalls and protect leaseholders. There must be proportionate responsibility for the building issues that now need to be addressed,” Thomas added.
However, Anthony Codling, CEO of online property platform Twindig and former Jefferies City property analyst, told City A.M. that the levy is unlikely to bruise incoming investment.
“Whilst I think it rather unfair that housebuilders should be taxed to pay for remediation works on homes they did not build, I do not think the related taxes will impact inward investment,” he said. “It may pause whilst the details of the tax emerge, but once the structure of any developer tax is finalised, investors will base their decision to invest on the expected post-tax returns.”